IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/788.html
   My bibliography  Save this paper

The impacts of alternative policy instruments on environmental performance. A firm level study of temporary and persistent effects

Author

Listed:

Abstract

We study the effects of various environmental regulations on environmental performance measured as emission intensity. Moreover, we aim to test whether any such effects are persistent or only temporary. Conventional theory predicts that indirect regulations as opposed to direct regulations provide continuous dynamic incentives for emission reductions. Our unique Norwegian firm level panel data set allow us to identify effects from different types of regulations such as environmental taxes, non-tradable emission quotas and technology standards. The data includes information of different environmental regulations, all kinds of polluting emissions, and a large number of control variables for all polluting incorporated firms. Empirically we identify positive and significant effects from both direct and indirect policy instruments. We also investigate whether the regulations provide continuous dynamic incentives that lead to persistent effects. In contrast to what the literature suggests, we find evidence that direct regulations promote persistent effects. Indirect regulations will, on the other hand, only have potential persistent effects if environmental taxes are increasing over time.

Suggested Citation

  • Brita Bye & Marit E. Klemetsen, 2014. "The impacts of alternative policy instruments on environmental performance. A firm level study of temporary and persistent effects," Discussion Papers 788, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:788
    as

    Download full text from publisher

    File URL: https://www.ssb.no/en/forskning/discussion-papers/_attachment/202105
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ian W.H. Parry & John Norregaard & Dirk Heine, 2012. "Environmental Tax Reform: Principles from Theory and Practice," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 101-125, August.
    2. Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
    3. Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2005. "Industrial characteristics, environmental regulations and air pollution: an analysis of the UK manufacturing sector," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 121-143, July.
    4. Newell, Richard G & Stavins, Robert N, 2003. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Journal of Regulatory Economics, Springer, vol. 23(1), pages 43-59, January.
    5. José Féres & Arnaud Reynaud, 2012. "Assessing the Impact of Formal and Informal Regulations on Environmental and Economic Performance of Brazilian Manufacturing Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 65-85, May.
    6. Marit E. Klemetsen & Brita Bye & Arvid Raknerud, 2013. "Can non-market regulations spur innovations in environmental technologies? A study on firm level patenting," Discussion Papers 754, Statistics Norway, Research Department.
    7. Annegrete Bruvoll & Hege Medin, 2003. "Factors Behind the Environmental Kuznets Curve. A Decomposition of the Changes in Air Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(1), pages 27-48, January.
    8. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    9. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
    10. Stavins, Robert, 2001. "Lessons From the American Experiment With Market-Based Environmental Policies," RFF Working Paper Series dp-01-53, Resources for the Future.
    11. Lawrence H. Goulder & Ian W. H. Parry, 2008. "Instrument Choice in Environmental Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 152-174, Summer.
    12. Bohm, Peter & Russell, Clifford S., 1985. "Comparative analysis of alternative policy instruments," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 10, pages 395-460, Elsevier.
    13. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    14. Bruvoll, Annegrete & Larsen, Bodil Merethe, 2004. "Greenhouse gas emissions in Norway: do carbon taxes work?," Energy Policy, Elsevier, vol. 32(4), pages 493-505, March.
    15. Maloney, Michael T. & Yandle, Bruce, 1984. "Estimation of the cost of air pollution control regulation," Journal of Environmental Economics and Management, Elsevier, vol. 11(3), pages 244-263, September.
    16. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
    17. Ian W.H. Parry & Mr. John Norregaard & Mr. Dirk Heine, 2012. "Environmental Tax Reform: Principles from Theory and Practice to Date," IMF Working Papers 2012/180, International Monetary Fund.
    18. Karine Nyborg & Kjetil Telle, 2006. "Firms’ Compliance to Environmental Regulation: Is There Really a Paradox?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 35(1), pages 1-18, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brita Bye & Marit E. Klemetsen, 2018. "The Impacts of Alternative Policy Instruments on Environmental Performance: A Firm Level Study of Temporary and Persistent Effects," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(2), pages 317-341, February.
    2. Daniel Cardona & Jenny De Freitas & Antoni Rubí-Barceló, 2021. "Environmental policy contests: command and control versus taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 654-684, June.
    3. Newell, Richard G & Stavins, Robert N, 2003. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Journal of Regulatory Economics, Springer, vol. 23(1), pages 43-59, January.
    4. Joseph E. Aldy & Robert Stavins, 2011. "The Promise and Problems of Pricing Carbon: Theory and Experience," NBER Working Papers 17569, National Bureau of Economic Research, Inc.
    5. Paul J. Burke, 2014. "Green Pricing in the Asia Pacific: An Idea Whose Time Has Come?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 561-575, September.
    6. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    7. Sterner, Thomas & Hoglund Isaksson, Lena, 2006. "Refunded emission payments theory, distribution of costs, and Swedish experience of NOx abatement," Ecological Economics, Elsevier, vol. 57(1), pages 93-106, April.
    8. Bergek, Anna & Berggren, Christian, 2014. "The impact of environmental policy instruments on innovation: A review of energy and automotive industry studies," Ecological Economics, Elsevier, vol. 106(C), pages 112-123.
    9. Borghesi, Simone & Cainelli, Giulio & Mazzanti, Massimiliano, 2012. "Brown Sunsets and Green Dawns in the Industrial Sector: Environmental Innovations, Firm Behavior and the European Emission Trading," Climate Change and Sustainable Development 121701, Fondazione Eni Enrico Mattei (FEEM).
    10. Giulio Cainelli & Massimiliano Mazzanti & Simone Borghesi, 2012. "The European Emission Trading Scheme and environmental innovation diffusion: Empirical analyses using Italian CIS data," Working Papers 201201, University of Ferrara, Department of Economics.
    11. Stavins, Robert N., 2019. "The Future of U.S. Carbon-Pricing Policy: Normative Assessment and Positive Prognosis," Working Paper Series rwp19-017, Harvard University, John F. Kennedy School of Government.
    12. Stavins, Robert & Newell, Richard, 2000. "Abatement-Cost Heterogeneity and Anticipated Savings from Market-Based Environmental Policies," Working Paper Series rwp00-006, Harvard University, John F. Kennedy School of Government.
    13. Jelić, Ozana Nadoveza, 2020. "Implications of Initial Assumptions in Agri-Environmental Nitrogen Pollution Reduction Policy Design: Quasi-Empirical Evidence from Croatia," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 69(4), December.
    14. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    15. Costantini, Valeria & Mazzanti, Massimiliano & Montini, Anna, 2013. "Environmental performance, innovation and spillovers. Evidence from a regional NAMEA," Ecological Economics, Elsevier, vol. 89(C), pages 101-114.
    16. Adel Shamaileh, 2016. "An Evaluation of the Effectiveness of Environment Policy in Jordan," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(2), pages 1-92, January.
    17. Don Fullerton & Andrew Leicester & Stephen Smith, 2008. "Environmental Taxes," NBER Working Papers 14197, National Bureau of Economic Research, Inc.
    18. Ian W.H. Parry & Mr. John Norregaard & Mr. Dirk Heine, 2012. "Environmental Tax Reform: Principles from Theory and Practice to Date," IMF Working Papers 2012/180, International Monetary Fund.
    19. Marit E. Klemetsen & Brita Bye & Arvid Raknerud, 2018. "Can Direct Regulations Spur Innovations in Environmental Technologies? A Study on Firm‐Level Patenting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(2), pages 338-371, April.
    20. Stavins, Robert, 2001. "Lessons From the American Experiment With Market-Based Environmental Policies," RFF Working Paper Series dp-01-53, Resources for the Future.

    More about this item

    Keywords

    environmental performance; emission intensity; environmental regulations; command-and-control; environmental taxes; long-run effects;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:788. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.